Harris Texas Buy-Sell Agreement between Two Shareholders of Closely Held Corporation

• Category: Corporations - Contracts
• State: Multi-State
• County: Harris
• Control #: US-02553BG
• Format: Word; Rich Text

Description

A corporation whose shares are held by a single shareholder or a closely-knit group of shareholders (such as a family) is known as a close corporation. The shares of stock are not traded publicly. Many of these types of corporations are small firms that in the past would have been operated as a sole proprietorship or partnership, but have been incorporated in order to obtain the advantages of limited liability or a tax benefit or both. A buy-sell agreement is an agreement between the owners (shareholders) of a firm, defining their mutual obligations, privileges, protections, and rights. The Harris Texas Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation is a legally binding contract that outlines the terms and conditions for buying and selling shares of the corporation between its shareholders. This agreement is crucial for maintaining the stability and continuity of the corporation in the event of certain triggering events such as a shareholder's death, disability, retirement, or voluntary/forced sale of their shares. This type of buy-sell agreement ensures that the remaining shareholders have the first right of refusal to purchase the shares being sold by the departing shareholder. It also establishes a fair and predetermined price for the shares, preventing any disputes or disagreements over valuation when a triggering event occurs. There are several types of Harris Texas Buy-Sell Agreements that shareholders can choose from, depending on their specific needs and preferences. These include: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder independently agrees to buy the shares being sold by the departing shareholder. The remaining shareholders use their personal funds or obtain financing to purchase the shares directly. 2. Redemption Agreement: With a redemption agreement, the corporation itself agrees to buy back the shares from the departing shareholder. The corporation uses its funds or financing to complete the purchase, effectively retiring the shares from circulation. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and redemption agreements. In this case, some shareholders buy the shares while the corporation buys the remaining shares to maintain control and ownership balance. 4. Wait-and-See Agreement: This agreement allows the remaining shareholders to choose between a cross-purchase or redemption agreement when a triggering event occurs. The decision is typically based on various factors, such as tax implications and financial considerations. Regardless of the specific type chosen, a Harris Texas Buy-Sell Agreement will typically address key provisions, including the valuation method for the shares, financing arrangements, payment terms, restrictions on transferability, rights of first refusal, dispute resolution procedures, and duration of the agreement. By entering into a comprehensive Harris Texas Buy-Sell Agreement, closely held corporations and their shareholders can protect their interests, ensure an orderly transition of ownership, and minimize the potential for conflicts and disruptions within the corporation. Seeking legal counsel is crucial to drafting an agreement that aligns with the specific needs and goals of the shareholders and complies with Texas state laws.

The Harris Texas Buy-Sell Agreement between Two Shareholders of a Closely Held Corporation is a legally binding contract that outlines the terms and conditions for buying and selling shares of the corporation between its shareholders. This agreement is crucial for maintaining the stability and continuity of the corporation in the event of certain triggering events such as a shareholder's death, disability, retirement, or voluntary/forced sale of their shares. This type of buy-sell agreement ensures that the remaining shareholders have the first right of refusal to purchase the shares being sold by the departing shareholder. It also establishes a fair and predetermined price for the shares, preventing any disputes or disagreements over valuation when a triggering event occurs. There are several types of Harris Texas Buy-Sell Agreements that shareholders can choose from, depending on their specific needs and preferences. These include: 1. Cross-Purchase Agreement: In this type of agreement, each shareholder independently agrees to buy the shares being sold by the departing shareholder. The remaining shareholders use their personal funds or obtain financing to purchase the shares directly. 2. Redemption Agreement: With a redemption agreement, the corporation itself agrees to buy back the shares from the departing shareholder. The corporation uses its funds or financing to complete the purchase, effectively retiring the shares from circulation. 3. Hybrid Agreement: A hybrid agreement combines elements of both the cross-purchase and redemption agreements. In this case, some shareholders buy the shares while the corporation buys the remaining shares to maintain control and ownership balance. 4. Wait-and-See Agreement: This agreement allows the remaining shareholders to choose between a cross-purchase or redemption agreement when a triggering event occurs. The decision is typically based on various factors, such as tax implications and financial considerations. Regardless of the specific type chosen, a Harris Texas Buy-Sell Agreement will typically address key provisions, including the valuation method for the shares, financing arrangements, payment terms, restrictions on transferability, rights of first refusal, dispute resolution procedures, and duration of the agreement. By entering into a comprehensive Harris Texas Buy-Sell Agreement, closely held corporations and their shareholders can protect their interests, ensure an orderly transition of ownership, and minimize the potential for conflicts and disruptions within the corporation. Seeking legal counsel is crucial to drafting an agreement that aligns with the specific needs and goals of the shareholders and complies with Texas state laws.